Transparency Portal
Ledger 5 – Non-Budgeted Expenditures

Ledger 5 is the name given to an accounting tool used to account for non-budgeted expenditures incurred during a fiscal year that are legally mandated or necessary to maintain public health, safety or welfare. These payments are subject to numerous safeguards to ensure they are legal and correct.

State budget expenditures are recorded in real time within a general account ledger, maintained by the Governor’s Office, to categorize types of expenditures for accounting purposes. Ledger 5 is the manner through which expenditures that are legally mandated or necessary to maintain public health, safety or welfare but lack or exceed state appropriations authority are identified and accounted. Ledger 5 is also used on a temporary basis when the timing of the receipt of other funds or revenues supporting (or augmenting) an appropriation does not align with the timing of the expenditure of funds.

In general, absent an applicable appropriation (or in excess of an appropriation), Pennsylvania constitutional restrictions within Article III, Section 24, provide that: “No money shall be paid out of the treasury, except on appropriations made by law and on warrant issued by the proper officers…”

However, there are several legal exceptions to the strict application of Article III, Section 24, related to federal spending mandates that supersede the state constitution and conflicting state constitutional provisions. These exceptions include: (1) prior fiscal year appropriations; (2) independent expenditure authority; (3) state or federal constitutional mandates; (4) the federal Fair Labor Standards Act; and (5) powers necessary to maintain the public health, safety and welfare of Pennsylvanians. More information is available in this memo.

In such instances, the Governor’s Office of the Budget sends documentation, known as an Expenditure Symbol Notification (ESN) memo, to Treasury to explain and justify the expenditure. Treasury reviews the ESN and other expenditure documentation to ensure that the payment is legal and correct. If the expenditure is approved, it is accounted for on Ledger 5.

After a state budget is enacted, including any supplemental funding, expenditures are removed from Ledger 5 and placed back in the originating ledger.


Note: Ledger 5 can also come into play during a budget impasse, when certain payments must continue to be made under law (e.g., payments necessary to maintain public health, safety or welfare, and payments which are required by federal mandate). In addition, some expenses are not appropriated through the state budget process because the funding comes from other sources; these are also not shown above. Examples include unemployment compensation, which is paid for from a trust fund, and pension payments from SERS and PSERS to annuitants, which are paid from the funds associated with each respective pension system.

At this time, Ledger 5 has not been used during Fiscal Year 2021-22. If and when it is, information will be presented on this page to show which line items are using Ledger 5, including an ESN memo from the Governor’s Office of the Budget for each line item.